"They want me to do something that I'm not wont to do in the first place, right?" the governor says. "Well, this is when I'm looking to get some bills done that are important for the people of Pennsylvania."

In an internal memo obtained by The Associated Press, August Hehemann proposed that the markup be raised from 30 percent, the rate that has stood since 1993, to 35 percent.

He said the agency's net income is expected to shrink in the fiscal year that started July 1, to $96 million from $121 million in the previous year largely due to double-digit increases in expenses such as pensions, health care and computer upgrades postponed from prior years.

"The decline in net income is attributed to operating expense growth of 11.8 percent, which is almost four times the rate of planned growth in sales," he wrote in the July 30 memo, which laid out issues for a private board discussion before its regular public meeting that day.

Chairman Joseph "Skip" Brion said Tuesday the three-member board discussed Hehemann's analysis as part of an annual financial review, but that there's no proposal before the board to increase the markup. He says he regards any such action as a last resort.

"There's always been a discussion about the last time the markup was increased," he said in a telephone interview. "From my perspective at this point in time, it's not a viable option."

The issue of the markup rate comes amid a high-profile legislative stalemate over the future of Pennsylvania's state-controlled liquor system.

Last year, the House passed a bill backed by Gov. Tom Corbett to privatize the liquor and wine sales by selling 1,200 new private store licenses, allowing thousands of bars, restaurants and grocery stores to begin selling bottles of wine. It also set a timetable for ending state involvement in wine and liquor shipments and sales.

In the Senate, a bill to liberalize beer sales and loosen restrictions on wine and spirits is bottled up in a committee.

The PLCB says it contributed more than $512 million to the state treasury in 2012-13, the latest numbers available, including $311 million from the liquor tax, $121 million from the sales tax and an $80 million transfer to the state's General Fund.

A spokesman for House Majority Leader Mike Turzai, a staunch privatization advocate, said figures in the memo conflict with PLCB's claim that its financial condition is sound.

"If accurate, to me it shows that the PLCB has been misleading itself, the Legislature and the public," said the spokesman, Steve Miskin. "They've always pooh-poohed any suggestions that they're not making the money that they claimed to be."

Matthew Brouillette of the Commonwealth Foundation, another privatization backer, said the memo shows the state-controlled liquor system "is not a cash cow for the commonwealth."

Wendell V. Young IV, head of the largest state-store employee union, said he's not convinced the system of more than 600 state stores needs to raise the markup, but that they could remain competitive with most neighboring states even if the rate were increased.

TONIGHT STATE LIQUOR CONTROL BOARD IS FEELING PRESSURE TO HIKE ITS MARKUP ON LIQUOR AND WINE. IT MEANS YOU COULD SOON BE PAYING MORE AT THE STATE STORE. PITTSBURGH ACTION NEWS 4 REPORTER MATT OUTSIDE A WINE AND SPIRITS STORE IN WESTMORELAND COUNTY. MATT, WHAT WILL ALL THIS MEAN FOR CONSUMERS? Reporter: WE HAVE TO PUT IT IN PERSPECTIVE. THE CHAIRMAN OF THE LIQUOR CONTROL BOARD SAID THIS WOULD BE A LAST RESORT OPTION TO SHORE UP THE AGENCY'S FINANCES. LARGELY, IN PART, BECAUSE IT WOULD REQUIRE SHOPPERS HERE AT THESE STORES TO PAY MORE. WHAT YOU'LL TEND TO SEE IS -- Reporter: DUQUESNE UNIVERSITY ECONOMICS PROFESSOR SAID ONE THING'S FOR SURE, IF THE PLCB WHICH USED TO INCREASE ITS MARKUP ON PRODUCTS -- PEOPLE WHO BUY AT THE STATE STORES WILL END UP PAYING MORE, PERIOD. Reporter: OFFICIALS STRESS THE CHANGE IS NOT SERIOUSLY BEING CONSIDERED AT THIS POINT. BUT THIS INTERNAL MEMO OBTAINED BY PITTSBURGH ACTION NEWS 4 WARNS OF A DECLINE IN PROJECTED PLCB INCOME AND PROPOSES A 5% INCREASE IN THE PRODUCT MARKUP WHICH HAS BEEN AT 30% FOR ABOUT 20 YEARS. THE EXTRA MONEY COLLECTED WOULD COMPENSATE FOR HIGHER PENSION AND HEALTH CARE COSTS AND TECHNOLOGY UPGRADES WHICH ARE EATING AWAY AT THE AGENCY'S BOTTOM LINE. WHAT IT SUGGESTS IS THAT THE PROBLEM THAT PCLB IS FACING IS NOT IN THE COST OF THE PRODUCT THEY'RE BUYING, BUT RATHER IN THEIR OVERHEAD, THEIR ADMINISTRATIVE EXPENSES. Reporter: WHEN IT COMES TO WHAT THE CHANGE WOULD MEAN FOR THE PRICES YOU PAY, DAVIES SAID SOME PRICES MAY NOT GO UP AS BRANDS TRY TO STAY COMPETITIVE, BUT THE REST WILL COST MORE. THE WLCB DOESN'T HAVE ANY COMPETITION. SO IT DOESN'T HAVE THE FORCE PUSHING THE COSTS DOWN. Reporter: TALK OF THE CHANGE WILL LIKELY REIGNITE THE DEBATE OVER DISMANTLING THE SYSTEM AND ALLOWING PRIVATE COMPANIES TO SELL LIQUOR AND WINE. THIS IS SOMETHING THAT PENNSYLVANIA BY A HUGE MARGIN WANTED FOR A LONG TIME. Reporter: RIGHT NOW, THERE ARE BILLS IN BOTH THE STATE HOUSE AND SENATE THAT WOULD MAKE CHANGES TO THE WAY ALCOHOL IS SOLD IN PENNSYLVANIA. BUT THOSE BILLS APPEAR TO HAVE